The Tipton & Coseley Building Society in the Black Country is restricting mortgage lending to locals after being inundated with inquiries from would-be home-buyers throughout Britain.

The tiny T&C, one of the country’s smallest mutuals with just four branches, is one of only a handful of mortgage providers still prepared to advance 95 per cent of a property’s value to first-time buyers.

"We were getting a lot of calls from around the country and we wanted to make sure people locally can get them," chief executive Chris Martin said. "We are here to help local people buy their own homes and we want to make sure we are able to continue doing that."

The decision coincided with the news two other lenders, the Bath Building Society and Earl Shilton Building Society in Leicester, had withdrawn all mortgage offerings except for standard variable rates.

A spokesman for the Bath BS said: "We need to keep liquidity high. Wholesale money is difficult to get and we have come to a standstill at the moment.

"We are hoping it will just be for a month, but we have taken on so much new business we have just run out of money to lend at the moment."

Meanwhile, the Newbury and Melton Mowbray societies joined the T&C in restricting new lending to local applicants.

A Council of Mortgage Lenders spokesman said: "We do not comment on decisions taken by individual members but what we are seeing across the market is a process of lenders adjusting their product range, availability and pricing to reflect changing market conditions.

"Decisions being taken by lenders are sensible and proportionate as they manage their businesses through changing circumstances.

"The underlying problem is a shortage of mortgage funding, which means there is less money to meet demand this year than there was before."

At the beginning of the year the CML forecast that lenders would only have enough funding to meet a third of demand this year.

Ray Boulger, senior technical manager at John Charcol, said: "For most lenders the issue is more about service than funding."

He said lenders were withdrawing rates with very little notice because the shortage of deals available on the market meant that if they gave a normal notice period they got flooded with applications.

Separately, the Tipton & Coseley’s Chris Martin urged members to exercise their right to vote at the society’s annual general meeting on April 14.

He has pledged to donate 20p to the society’s Charitable Foundation for every vote cast.

"Our members really do play an important role in shaping the ongoing development of the society and I don’t want anyone to miss the opportunity to have their say."